Why are wages in Germany higher than in Poland? What has made the United States the cradle of the world's richest people? How are India and China building their economic power? We tried to answer these and other questions in our last article. Looking ahead, we begin the Q3 earnings season. Traditionally, financial companies will be the first to report data, providing a better assessment of the current economic situation in the US. In September 2024, US core inflation rose by 0.3 per cent m/m and 3.3 per cent y/y, strengthening the dollar. Despite expectations of interest rate cuts by the Fed, inflation and good labour market data suggest that the process will be gradual. The dollar is holding near PLN 3.92 and the euro at PLN 4.30. Analysts at Conotoxia Ltd indicate that the dollar could fall below PLN 3.85 by the end of 2024. At present, however, currency markets remain influenced by uncertainty surrounding the situation in the Middle East and the upcoming US elections. The ECB's decision on a possible further interest rate cut, as well as the publication of inflation data from the UK and the euro area, appear to be key in the coming week.
Table of contents:
- UK consumer price index (CPI) monthly (September)
- Eurozone consumer price index (CPI) monthly (September)
- Eurozone interest rate decision
Wednesday, 16.10, 8:00 CET, UK consumer price index (CPI) monthly (September)
The annual rate of inflation in the UK in August this year was 2.2 per cent, remaining at the same level as in July. The main drivers of price increases were in the leisure, cultural and used car sectors. In turn, falling fuel prices, particularly petrol, and reductions in restaurant and hotel prices, including alcohol, put downward pressure on inflation.
Analysts' consensus is for UK CPI inflation to remain further down at 2.2 per cent.
Source: Tradingeconomics
A higher-than-expected reading could be bullish for GBP, while a lower-than-expected reading could act bearishly on GBP.
Impact: EUR/GBP, GBP/USD, GBP/PLN
Thursday, 17.10, 11:00 CET, Eurozone consumer price index (CPI) monthly (September)
According to the preliminary reading for September 2024, inflation in the euro area fell to 1.8 per cent, the lowest level since April 2021 and below the ECB's target of 2 per cent. Energy prices fell and inflation in services slowed, although food, alcohol and tobacco prices rose slightly. The ECB expects inflation to pick up by the end of the year, but should fall back towards 2 per cent from 2025.
Analysts' consensus is for CPI inflation in the euro area to remain at 1.8 per cent.
Source: Tradingeconomics.com
A higher-than-expected reading could be bullish for the EUR, while a lower-than-expected reading could act bearishly on the EUR.
Impact: EUR/USD, EUR/PLN
Thursday 17.10, 14:15 CET, Eurozone interest rate decision
The ECB cut interest rates by 60 bps at its last meeting, which was in line with market expectations. This was the 2nd rate cut in this cycle, but the first time the ECB has started a cycle of rate cuts before the US. In its latest meeting report, the ECB suggested that a gradual rate cut would be appropriate if data were in line with forecasts. Faster disinflation or a slower recovery may require faster action, while slower disinflation or rapid economic growth may require a slower pace. Policymakers stressed that decisions will depend on incoming data.
Analysts' consensus is for another 25bp interest rate cut.
Source: Tradingeconomics.com
A higher-than-expected interest rate could be bullish for the EUR, while a lower-than-expected rate could act bearishly on the EUR.
Impact: EUR/USD, EUR/PLN
Grzegorz Dróżdż, CIIA, Market Analyst of Conotoxia Ltd. (Conotoxia investment service)
The above trade publication does not constitute an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No. 596/2014 of April 16, 2014. It has been prepared for informational purposes and should not form the basis for investment decisions. Neither the author of the publication nor Conotoxia Ltd. shall be liable for investment decisions made on the basis of the information contained herein. Copying or reproducing this publication without written permission from Conotoxia Ltd. is prohibited. Past performance is not a reliable indicator of future results.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.23% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
